Budget delivers for little for Tourism and Hospitality
There were few surprises in the Chancellor’s recent Budget and, for the tourism and hospitality sector, there was limited direct support at a time when businesses across Northern Ireland continue to face significant cost and operational pressures.
A key challenge for Northern Ireland remains the uncertainty around how additional funding will be allocated. Any increase to the block grant is not ring-fenced, meaning the Northern Ireland Executive will decide how the additional budget is distributed across departments and priorities.
In England, the Chancellor announced the permanent lowering of business tax rates for retail, hospitality and leisure properties. However, as this is a devolved matter, the decision on whether to follow suit will rest with the NI Executive, creating further uncertainty for local tourism and hospitality businesses.
Air Passenger Duty
A further increase to Air Passenger Duty was also announced in the budget. Reacting to the move, NITA member, Dan Owens, Chief Executive of Belfast International Airport said it is an additional tax on air travel that the Irish Republic does not have and therefore it makes NI less attractive to airlines considering introducing new routes.
“This is a harmful tax that suffocates economic growth. The failure of the UK Government to act means we will now ask the NI Executive to step in. If the Executive is committed to meeting its target of increasing the value of tourism in NI to £2bn by 2030, then it needs to look at reducing APD as it is a proven way to deliver greater international connectivity and economic growth.”
The Economy Minister said last week that her officials are examining a number of policy options including APD reform and are preparing a consultation document which will be issued in the coming months.
Minimum Wage Increases
Employers across the sector will also face additional pressures from the increase in the minimum wage. From April next year, the hourly rate for those aged over 21 will rise by 50p to £12.71, with workers aged 18–20 seeing an 85p increase to £10.85, and under-18s and apprentices receiving a 45p rise to £8 per hour. In addition, the freezing of income tax thresholds until the end of the 2030/31 financial year is expected to leave many households with reduced disposable income, potentially impacting consumer spending within the hospitality and tourism economy.
There were, however, some more positive signals for business. The Chancellor confirmed continued funding for skills and employment support programmes, particularly for those who have been out of work or education long-term. In Northern Ireland, schemes such as the Job Start Programme, which NITA has actively promoted, boosting apprenticeships and training schemes will be hoping for Barnett consequentials to enable continued support for employers and jobseekers.
Key Measures Announced in the Budget
The main announcements from Chancellor Rachel Reeves’ Budget Statement relevant to Northern Ireland include:
- An additional £370 million to the block grant over the Spending Review period.
- £17 million in support for NI businesses dealing with post-Brexit trade rules.
- £2.25 million for Intertrade UK to help remove trade barriers and strengthen business links.
- Continued support for major projects including the AMIC Centre, Studio Ulster and City & Growth Deals.
- A new Defence Growth Deal for Northern Ireland, building on the 900 jobs already directly supported by government defence spending in Northern Ireland.
- A call for evidence on how the tax system can better support entrepreneurs.
- The removal of the Two-Child Benefit Cap from April 2026, subject to decisions by devolved administrations.
- A commitment that if the NI Executive decides to remove the cap, the UK Government will fund the associated cost.
- Income tax thresholds frozen until the end of the 2030/31 financial year.
- Changes to National Insurance treatment of salary-sacrificed pension contributions above £2,000 from April 2029.
- A freeze on fuel duty until September 2026.
- A new mileage-based charge on electric and plug-in hybrid vehicles from April 2028.
- Reform of the ISA system from April 2027, with £8,000 of the £20,000 allowance for under-65s designated for investment purposes.
Response from the Finance Minister John O Dowd
Northern Ireland’s Finance Minister, John O’Dowd, stated that there was little in the Budget to support economic growth for small and medium-sized businesses. He also noted that calls to support the hospitality industry through a reduced VAT rate went unanswered and said that the Budget further strengthened the case for greater fiscal devolution.
Importantly for business planning and confidence, the Minister confirmed that he intends to share a draft multi-year budget with Executive Ministers before Christmas.
NITA Response
Responding to the Budget, NITA Chief Executive Joanne Stuart said:
“While the Budget contains some welcome commitments, there remains limited direct support for tourism and hospitality. Greater certainty around funding through three-year budgets is vital for businesses and investors, so we were pleased to hear the Finance Minister confirm that a draft multi-year budget will be shared with Executive Ministers before Christmas. This clarity will be essential in helping the tourism and hospitality sector plan for the years ahead.”
Looking Ahead
NITA will continue to engage closely with the NI Executive, UK Government and key stakeholders to ensure the needs of the tourism and hospitality sector are clearly represented. Long-term budget certainty, fair taxation and targeted business support will be critical to enabling tourism businesses across Northern Ireland to invest, grow and continue to provide employment and opportunity in communities across the region.
